According to Ian Woodman, a number of past studies estimate that many taxpayers overpay taxes. This, according to Ian Woodman, was largely attributed to the number of taxpayers who understate charitable contributions.
Did you tithe or donate clothing to Goodwill? Ian Woodman’s staff at Instant Tax Solutions can help you claim these deductions and avoid paying too much to the IRS. Ian Woodman has found some people reject claiming these deductions for a variety of reasons. One of these reasons, Ian Woodman says, is that it is too much trouble to get a receipt and itemize. Another, according to Ian Woodman, is that they feel the donation is no longer charitable if they get a tax credit for it.
To cure this, Ian Woodman encourages his clients to reframe their thinking. Claiming contributions on a tax return isn’t the same as being handed cash for that contribution, Ian Woodman states. All you are doing is reducing the portion of your annual income that is taxed. As Ian Woodman explains it, say you made $50,000 last year but gave $5,000 to your church. By claiming that $5,000, Ian Woodman states, you are setting aside that $5,000 to keep the IRS from taxing it. So your total taxed income would be $45,000—the amount of your salary you didn’t give to the church.
Another problem with item donations, aside from the extra effort in getting a receipt, is itemizing donations, Ian Woodman adds. The IRS has cracked down on item donations, requiring taxpayers to now claim fair market value for each item they donate, according to Ian Woodman. Goodwill has a fair market value calculator on its site, but taxpayers still have to estimate between such ranges as two dollars to twelve dollars for a woman’s blouse. Taxpayers are told to use garage sale prices, but this can be vague, according to Ian Woodman. As Ian Woodman has found, taxpayers are confused as to what is fair for various items, and many end up undervaluing items just to be safe.
By consulting a tax professional like the ones at Instant Tax Solutions, notes Woodman, taxpayers can make sure they understand the deductions to which they are entitled. Ian Woodman says that the team of professionals at Instant Tax Solutions can explain to you the best way to value your donations and make sure you have the necessary documentation in order in case you are ever audited.
For more information, contact Instant Tax Solutions by visiting www.instanttaxsolutions.com